On January 7, 2019, the U.S. Supreme Court cleared the way for the Attorney General of Massachusetts to obtain documents from ExxonMobil to determine whether the oil and gas giant had knowingly concealed its knowledge regarding the causal relationship between the burning of fossil fuels and global climate change. The lawsuit alleges that in concealing this knowledge, ExxonMobil misled both consumers and investors.
A similar suit, filed by New York Attorney General Barbara D. Underwood, alleges that ExxonMobil failed to inform its investors of risk that climate regulation posed to its business and according to the A.G's office: "deceiv(ed) investors as to the company’s true financial exposure to increasing regulations and policies adopted to mitigate the adverse effects of climate change."
Though there is currently no requirement for corporations to disclose climate risk to investors, the SEC does require them to disclose material risks. The suits referred to above allege that climate-related risks were, in this case, material.
Though sometimes corporations would prefer not to ask the questions around climate risks, so that they can claim ignorance, this strategy appears to be under threat. There is a broadening awareness that climate-related risks (whether regulatory risk or physical risks) can indeed be material. If the courts begin finding in support of the materiality of climate risks, then not knowing becomes unacceptable.
These lawsuits are critical in advancing the very important discussion of the the economics of climate change and of climate risk in particular -- as well as the critical importance of climate disclosure to public health and economic well-being.
In the brief video, CEO of The Climate Service, James McMahon discusses the importance of the recent Supreme Court decision to the field of Climanomics.
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